Dumping - what it means and how to use it to eliminate competition. How to deal with competitors' price dumping? Real examples

On modern market There is a lot of competition, so manufacturers resort to various methods in order to sell your goods and services. So, some are trying to dump. This means artificially lowering the cost of products in order to displace competitors and occupy their niche. In a number of countries, dumping is perceived negatively, so laws are created against it and various measures are taken.

What is dumping?

According to financiers, dumping in the economy is an ambiguous concept. On the one hand, this phenomenon helps the state or companies penetrate into new market and firmly establish yourself there. On the other hand, similar products from other manufacturers depreciate, which leads to losses.

In a general sense, dumping is understood as the sale of goods and services at prices that are artificially low. Such prices are often lower than market prices, and sometimes even lower than the cost of production.

What is the goal of those who resort to dumping? The most the main objective- this is to get rid of competitors and strengthen your position in the market. At the same time, thoughtful company managers understand that dumping also means hoping for compensation for current losses in the future.

But losses may differ, since some companies constantly dump prices, while others only dump prices once initial stage trade. The latter are simply trying to quickly sell illiquid goods or monetize stocks in the warehouse. Moreover, this is done if there is a risk of incurring more serious losses than losses due to price dumping.

Main types of dumping

According to modern laws in force in the territories of developed countries, there are the following types dumping:

Types of dumping in commerce

In the commercial area, there are several types of dumping, including:

Intentional dumping is the deliberate lowering of prices in the export market in order to “remove” competing firms in a given industry and later establish their own monopoly prices for goods. Sometimes these prices are lower than on national markets, and even less often - lower than production costs. In this situation, dumping means acting thoughtfully and systematically.
Sporadic dumping is a company’s desire to sell excess inventories of products at a reduced price to the foreign market. This happens when the volume of production of goods is significantly higher than the capacity of the domestic market. In other words, the volume of supply exceeds demand in the domestic market, and therefore there is a need to sell the surplus somewhere.
Constant dumping is the export of products at a price below cost on a regular basis.
Mutual dumping is countertrade between two powers of the same goods at a reduced price. Sometimes this phenomenon occurs under conditions of monopolization of a particular product in each of the two states that have decided to dump. This is not an indicator of friendly relations between countries, but only mutual financial interest.
Reverse dumping - increasing the price of export goods compared to the price of the same product on the national market. This phenomenon is very rare and manifests itself as a consequence of sharp jumps in exchange rates.

What does dumping lead to?

The consequences of dumping are very disastrous, primarily for the country that is the importer. In this state, producers suffer due to imported cheap products. That is, they suffer serious material damage.

In addition, dumping negatively affects the level of growth of economic indicators on a local scale. In particular, this can be seen in the services market, where suppliers deliberately lower prices in order to take their “place in the sun.” If such a phenomenon becomes systemic, then not only one industry suffers, but also the entire regional market where similar services are provided.

Fight against dumping

Today, many countries are faced with the question: how to combat dumping? After all, the attitude towards it on the part of manufacturers is often negative. It is believed that dumping destroys all rules of fair competition and leads to local companies suffering losses.

Modern economic practice has already come to the conclusion that dumping can be resisted with the help of legislation. There are already special anti-dumping laws, and an anti-dumping duty is established on the import of goods at reduced prices.

If dumping brings serious problems related to damage material point view, then experts recommend that the affected companies conduct an investigation and contact the relevant authorities to clarify the circumstances.

Hello! In this article we will talk about what dumping is and why it is necessary.

Today you will learn:

What is dumping and why is it necessary for manufacturers?
How to fight dumping;
Which companies achieved good results thanks to dumping.

What is dumping in simple words

Price dumping, translated from in English, means to dump or dump.

In simple words, dumping concept - This is a simple sale of goods at a specially reduced price, below the market value.

Sometimes companies lower prices so much that they operate at a loss. Dumping is required exclusively for the market. By lowering prices, you can quickly increase turnover and generate revenue.

As a rule, a company reduces the price of a product only when it enters the market and wants to attract a buyer. Such newcomers are even ready to work at a loss today in order to get a good income tomorrow.

Some companies cut prices in order to force out a competitor. The thing is that not everyone can withstand price races and simply leave the market so as not to lose profits.

If you look at it from the consumer’s point of view, then for him market dumping is an opportunity to save money own funds and buy goods at attractive price.

As for the manufacturer, artificial price reductions are prohibited at the state level. The World Trade Organization maintains strict control over the activities of all manufacturers, since it can cause great damage to the country's economy, leaving many citizens without work.

The main purpose of dumping

A dumping price is a forced measure, thanks to which a company can either win part of the market or get out of the crisis. In the second case it is the only option making a profit to stay afloat.

Let us note the main goals of dumping, which are achieved by reducing prices for goods:

Conquer your niche in the market. As has already been said, when a new manufacturer appears on the market, it can occupy its niche only by reducing the cost of its products. In order for people to actively purchase new products, companies advertise their products in large shopping centers and through the media. As soon as a base of regular customers is developed, prices will be gradually increased.
Client “feeding” or internal dumping. This is aimed solely at the retail buyer. Thanks to minimum price the client will purchase the products and become a regular customer. If the quality of the product does not deteriorate over time, the buyer will become permanent. And also don’t forget about the famous “word of mouth”. Buyers often advertise a profitable product to their family and friends.
Get a serious client. This is necessary if the company decides to enter into an agreement with a large shopping center and deliver goods at the lowest cost. By offering a reduced price, the manufacturing company can benefit from the volume that will be sold through a partner.
Clearing the warehouse. This is true when the entire warehouse is filled with unclaimed products. Since the product may deteriorate, the company deliberately reduces the cost and sells it quickly. You can sometimes find a product on the counter that comes with a second one, as part of a promotion, at a reduced price.

Types of dumping

In the sales field, it is customary to distinguish between two types of dumping:

Price is when the cost of products in the domestic market is higher than products that are exported.
Cost - this is when an organization sells commercial products below.

By reducing costs, companies are trying to achieve various goals. However, it is necessary to take into account that reducing the cost of a product is a necessary measure and if you use it constantly, it will go into the negative.

In addition to the listed types, we can distinguish:

Constant- This is a special dumping strategy when products are constantly sold at cost. Typically, such a reduction is used to sell related products.
Mutual- This is a counter sale of a product at a similar, reduced price as a competitor. As a rule, such dumping occurs between different countries, in order to conquer the market. The only calculation is who will be the first to give up and leave the market.
Back- this is when the cost of a product in the domestic market is slightly less than the cost for export. As a rule, this method of reducing prices is observed in countries that supply electricity. Also, a price decrease may be caused by currency fluctuations.
Deliberate– reducing the cost of products only to oust its competitor from the market. At the same time, the company pursues only one goal - to become a monopolist in the market. However, there is a slight disadvantage here, because this type is not durable and one competitor can always be replaced by another. A company that has already conquered the market will not be able to drop in price again and operate at a loss.
Sporadic– this is when the cost of a product is reduced only in order to quickly sell it. This need arises when there is a surplus in warehouses. But a product can also be sold at a reduced price if it is lying in a warehouse and the buyer does not want to purchase it at the established price.

However, there are companies that are constantly reducing the cost of their products and. But how do they get their income? In fact, everything is simple and they save on the quality of the product.

Each company has its own reasons for dumping. The only thing companies should do is keep strict records and do everything to make a profit.

Reduced price to participate in the auction.

This form of dumping must be highlighted separately. As a rule, the government agency is satisfied electronic trading with only one goal - to get the most advantageous offer. In practice, the winner is the manufacturer who offers the minimum price for his product.

It is no secret that many suppliers, in order to win, sometimes lower the price below cost. After winning, the work turns out to be unfulfilled or of poor quality.

To prevent this from happening, Federal Law 44 was adopted at the state level, which defines ways to combat dumping and establishes punishment for a manufacturer who violated the law and deliberately reduced the price of its products. All manufacturers who take part in the auction undergo strict verification.

Consequences of dumping

It is worth taking into account that the problems of dumping are extremely deplorable. This especially applies to a country that acts as an importer. This is where manufacturers begin to suffer the most due to the cheap products that enter the market. As a result, local producers suffer colossal material losses.

And also do not forget that price dumping has a negative impact on the level of growth of economic indicators. As a rule, this can be found in the market where suppliers deliberately reduce their pricing policy in order to capture the market.

If this becomes a habit, then not only one industry may suffer, but also the entire regional market, which produces similar products.

Pros and cons of dumping

Let's consider the advantages and disadvantages of reducing the cost of goods in order to conquer the market.

Pros:

The emergence and development of a new product on the market that was previously unknown to anyone;
Attraction of new clients;
Dumping does not imply additional resources, which means they can be used to promote products;
Dumping does not require additional funding.

Minuses:

As a result of lower pricing policy, profitability decreases;
The professional community is not on the side of companies that play with prices;
Some customers may refuse the product at low cost. For many, price characterizes quality.

How to fight dumping

It is worth noting once again that dumping of competitors is a forced measure that companies use exclusively in an emergency situation. But what to do when you are on the other side of the barricade? A completely logical question arises: how to deal with the reduction in cost of commercial products and protect against dumping?

Anti-dumping strategies:

Expectation.

Of course, you may not believe it, but the simplest thing you can do is just wait. It is worth understanding that if a new manufacturer enters the market and has not properly established manufacturing process, then lowering the price, he is simply slowly digging a hole for himself.

So just watch him on the sidelines and wait for him to go broke. At this point, you will not only return to the market and be able to make your profit, but also buy the premises and its equipment cheaply.

Thanks to new equipment, purchased for pennies, you can increase your production volumes. However, before purchasing equipment and space from former competitor, it is worth carefully calculating your financial capabilities.

Make friends with a competitor.

You don't really have to be best friend, to your competitor. This strategy is necessary in order to maintain an equal pricing policy in the market. Thanks to this, companies will be able to make their profit and stay afloat.

Of course, all contractual relations are discussed only verbally and are not confirmed by any documents. But, nevertheless, this scheme works well.

Raise the price.

Some manufacturers are terrified of raising prices. In this case, there is a big risk of losing a regular customer.

But you can look at it from the other side. Thanks to the price increase, it is possible to switch to new segment, from “beginner” to “professional” and increase your average bill.

Of course, you will need to change the packaging, introduce a new product, advertise the new product well, and possibly improve the quality of the product.

Package offer.

Of course, this is more suitable for the service industry, where you can quickly persuade a client to purchase Additional services at an attractive price. As for products, here we can offer free shipping, interest-free installments or payment for goods by card.

It is worth noting that interest-free installments are an excellent move that allows you to increase sales volumes and achieve the desired profitability.

Leave the market.

This is the last and most unusual option, which is suitable if competitors have appeared on the market who offer similar products at the lowest price. In order not to work at a loss and not to wage a long war with your competitors, it is easier to go to another business.

It is extremely difficult to take this step, but sometimes it is the only way out, otherwise there is a risk of losing everything that has been accumulated over the years.

A few examples of companies that have entered the market this way

If you carefully study the history of the country, you can see several examples of dumping, when companies entered the market only due to a decrease in cost.

Among such companies it is worth highlighting:

Sony.

As for the well-known company Sony, it appeared on the market in 1970. The first profit appeared solely due to the fact that the company produced televisions for export at 40 percent more expensive than they cost on the Japanese market.

But the country's government quickly noticed this and forced the company to answer for its actions and correct violations.

But in such a situation, the company acted simply brilliantly. They took and opened the production of televisions in the United States and stopped making deliveries from Japan. In the states they began to produce new models, the cost of which was, of course, higher.

In such a situation, the authorities could not do anything, since the company did everything right, without breaking the law. It turns out that Sony, thanks to a simple dumping policy, was able to win and strengthen its position in the American market.

To this day, the company occupies a good position and poses serious competition to other manufacturers.

Nissan.

Everyone famous company, which produces cars, was also found dumping several years ago. It all started when the manufacturer simply decided to move production Vehicle to European countries.

Thanks to this, costs were reduced, and the company decided to offer cars at reduced prices. But such a reduction in prices was quickly noticed by the state. However, long-term litigation resulted in all charges against the company being dropped.

The modern market is full of competition, as a result of which manufacturers have to resort to various methods to sell their products or services. Some of them are trying to dump, that is, artificially reduce prices for goods in order to displace competitors and strengthen their positions in the market. Many countries have a negative attitude towards dumping, and therefore, in an effort to protect the domestic market, they apply certain measures in relation to dumping.

Dumping - what is it in simple words?

Financiers consider the concept of dumping in economics ambiguous. On the one hand, it helps countries or enterprises to enter and gain a strong foothold in new markets. On the other hand, similar products of third-party organizations depreciate, leading them to large losses.

Important: Today, a lot of information on this topic is written for and in their language. Therefore, speaking in simple words, understandable to others, dumping is the sale of goods and services at artificially low prices. These prices, as a rule, are lower than market prices, and in some cases even lower than the cost of the goods.

The main purpose for which people turn to dumping is to get rid of competitors and conquer their niche. At the same time, thoughtful management understands that dumping means hoping to make up for losses in the future. The amount of losses can vary greatly, because some companies constantly reduce prices, while others resort to dumping only once. The latter, as a rule, try in this way to quickly sell off illiquid goods or make a profit from warehouse stocks. Moreover, they act this way only if there is a risk of serious losses exceeding the amount of losses due to price dumping.

But not all low price tags are related to dumping. Sometimes a reduction in cost is a consequence of a successful marketing campaign, minimization of production costs or costs of maintaining trade. Dumping differs from a simple price reduction in the following way: when firms use this tactic, they do not think about the quality of the product, as well as the quality of service, and voluntarily abandon the normal level of profitability. If, during a marketing campaign or when costs are reduced, prices exceed the cost of goods or services, then with dumping the opposite picture is most often observed.

Goals

Dumping is a forced measure in which firms see a tactic to conquer the market or a way to overcome a crisis. In the latter case, this is perhaps the only way to make a profit, allowing you to survive a difficult period.

Dumping achieves a number of goals:

Conquering a niche in the market. The only way for newcomers to strengthen their position in the market is to offer products at a reduced cost. After the company has its regular customers, prices will slowly creep up until they reach the target ceiling.
Developing a client base. In this case, dumping prices are aimed exclusively at the retail buyer. Low cost will attract a new consumer, and if the quality of the product is more than satisfactory, then in the future this person may become a regular customer. Word of mouth will also play a huge role here. Buyers often advertise their favorite and profitable product to their friends and acquaintances.
Feeding a serious client. Here we are talking about the company’s desire to enter into an agreement with a large sales agent, presenting itself with a particularly advantageous offer. By setting a minimum price tag, the manufacturer will be able to make money on the volume that will be sold with the help of a partner.
Sale of warehouse stocks. This is true when the entire warehouse is filled with illiquid goods. Companies also deliberately reduce the price tag for products with a limited shelf life and manage to sell them before they begin to deteriorate. Sometimes on store shelves you can find a promotional product that comes with a second product at a reduced cost.

Kinds

The legislation provides for three main types of dumping:

price - when the cost of a product in the domestic market exceeds the price tag of similar products for export;
cost - when a company sells a product at a price lower than its cost;
foreign exchange – an attractive price tag is achieved by depreciating the national currency, which is especially beneficial for exporters.

Important: By reducing the cost of goods or services, firms pursue different goals. However, it is important to understand that lowering the price is a necessary measure, and if you often resort to this tactic, the business may go into the red.

In commercial practice, there are several variations of dumping:

Constant - usually used when selling related products, it implies the constant sale of certain items at a price equal to cost.
Mutual – sale of goods at a reduced cost, similar to the competitor’s price tag. Typically, this strategy is used by different countries in order to conquer the market. The calculation here is: “sink or perish.”
The opposite is when the cost of products in the domestic market is slightly lower than the price for export. This phenomenon usually occurs in countries involved in the supply of electricity.
Intentional - reducing the price tag of a product with one sole purpose - to displace a competitor and become a monopolist in the market. However, sometimes it happens that one competitor is replaced by another, and the company that previously conquered the market has to retreat because it can no longer lower its price and operate at a loss.
Sporadic - such price dumping is associated with the desire to sell the goods quickly. This need occurs when there is a surplus in the warehouse. The seller can also put the product on sale at a reduced price if there is no demand for it.

There are also companies that constantly reduce the cost of their products in order to attract customers. This may seem strange, because they need to survive on something. This begs the question: what does their income consist of? It turns out that everything is quite simple, such companies save on the quality of the product. Some companies, in order to reduce costs, enter into an agreement with, thereby saving on personnel.

Important: The reasons for price reductions in each individual case may be different. The only thing that companies should not forget is to maintain strict records and put in every effort to make a profit.

Advantages and disadvantages

Everything that was listed above suggests that dumping is a positive economic phenomenon. If you don’t go into details, then that’s how it is. Lower prices allow people to buy things that were previously out of their reach. There are other very significant advantages:

The policy of the phenomenon under consideration is useful for both small businesses and newcomers. Any businessman knows how difficult it is to break through at the beginning of his activity, when an already difficult situation is overshadowed by the presence of competitors who have firmly occupied their niche. Dumping gives a novice entrepreneur a chance to penetrate this area and, if possible, strengthen his position in it.
Through dumping, you can successfully introduce some new product to the market, which at first, due to the lack of the slightest information about it, may cause distrust on the part of consumers. Low prices capable of whetting the curiosity of the public. In addition, a reduction in cost may rekindle interest in any other product of the company. Well, in the end, this tactic allows you to minimize advertising costs, since low price tags themselves advertise themselves well.
Another undoubted advantage of dumping is that no investment is needed to implement one or another form of dumping. And if everything goes well, the company expects a new round of development.

We should also talk about the disadvantages that accompany such a price reduction:

A global drop in prices, especially when they are below cost, cannot but affect the company’s income and. Of course, they will become much lower, but if all products are sold in accordance with a competent business plan, then the “hole” in monetary terms will be narrowed or completely prevented.
Competitors often have a negative attitude towards companies that have launched this program, and therefore the initiators need to be prepared to take the blow, since a price reduction from one manufacturer may be followed by dumping from another. And this, in turn, can have a bad impact on the company that began to act first.
And finally, no matter how happy the client is about the low price tags, he will still be tormented by doubts regarding the quality of the product. And even after dumping is eliminated, the buyer will avoid these products, considering them second-rate, and even now at an inflated cost. This means that the future success of the business depends on how the company will act after prices return to their original value.

Consequences of dumping

It is important to understand that dumping is a powerful tool that can lead to very disastrous consequences. This is especially true for countries importing any products from other countries. It is on their territory that manufacturers begin to experience severe difficulties due to cheap items appearing on the market. As a result of this policy, local companies suffer colossal losses in material terms.

We should not forget that price dumping negatively affects the growth of economic indicators. As a rule, this situation can be observed in markets where suppliers deliberately reduce prices in order to win them. If this becomes a habit, it may have a negative impact not only on a particular industry, but also on the entire regional market engaged in the production of similar goods.

Anti-dumping measures - what are they?

Anti-dumping measures are restrictions taken by the state to protect the domestic market from dumping. As a rule, they are expressed in the form of corresponding payments applied in addition to customs duty rates. The introduction of additional monetary fees in relation to countries that ship goods for export is used to increase the cost of their imported products to the “normal” price level in the importing country and to protect local producers from possible losses.

How to deal with competitors' dumping?

It is worth emphasizing once again that a price reduction is a forced measure that is used by firms only in in case of emergency. But what should those who find themselves on the other side of the barricade do? How to combat dumping by competitors without reducing prices?

Wait. This is the easiest way. A competitor will not be able to survive in the market by constantly reducing prices, because its costs do not decrease. However, this tactic can only work if there are regular customers who will not go over to the enemy’s side in pursuit of cheapness.
Add value. In order not to reduce the cost of the product, you can try to “equip” it with additional services or accessories. An individual approach plays an important role here.
Enlist the support of the supplier. You can agree with the supplier company to control prices in the region, because dumping is also unprofitable for it. The volume of products sold largely depends on the number of dealers.
Increase profits from each client. Here we are talking about the constant expansion of purchasing opportunities, for example, by imposing related products or additional services on the client.
Carry out a temporary promotion, lowering the price tag to a level lower than that of a competitor, offer a discount or bonus for the purchase of the second and subsequent products.
Another method of combating competitor dumping is to create a product that is in demand by customers and has no analogues or direct competitors.

Save the article in 2 clicks:

Dumping can be a good way to attract customers, gain valuable experience, and create partnerships. Today, there are several known cases where companies entered the market only by lowering prices. However, management must understand that customers attracted by low prices may leave immediately after the price tags are raised. If this tactic is used by the company quite often, then it is necessary to take care of establishing sales.

In contact with

About 20% of retailers regularly violate the vendor’s pricing policy, cutting prices in the range from 1 to 15%. This happens because, in pursuit of buyers, some online stores strive for the “price bottom,” sacrificing their own margins, and at the same time the interests of suppliers and distributors.

Some people dump to stimulate sales, others unknowingly repeat violations, focusing on competitors’ prices that have already deviated from the vendor’s recommended retail price.

Meanwhile, dumping in retail always occurs according to the same principle, similar to the “domino principle”, when a drop in price occurs along a related chain. One store lowered the price of a product, then another matched it - and so on until the largest market players violated the recommended price. Therefore, one of the most effective ways The fight against violation of the RRP is to quickly detect the first violator with subsequent equalization of the price on his shelf.

If this is not done on time, very soon the manufacturer will be faced with massive dumping of its goods and will not be able to find the last one who started this whole mess, because all the stores will point fingers at each other. But no matter who starts dumping and whatever the reason, the result for the manufacturer is always the same: deviation from the sales strategy and devaluation of the brand. Of course, vendors do not sit idly by and fight against negative trends: they monitor violations, record them, and write letters to violators.

And it really works!

How to resist dumping?

Let's see what a vendor's daily algorithm for combating dumping in retail usually looks like:

In the morning, the vendor sends recommended retail prices to online stores.
In the middle of the day, he checks prices on price platforms.
Within a few hours after monitoring, letters are sent to violators asking them to correct the dumping.
Towards the end of the day, repeated monitoring is carried out and, if violations remain, the vendor, through letters or calls, asks the online store to correct the deviation.
The vendor applies penalties to system violators in the form of cancellation of a marketing bonus, an increase in the purchase price - up to a complete cessation of supplies, etc.

But is this approach effective enough in today's market? Isn't the resource expenditure on servicing such processes too high, given that all operations have to be performed manually?

Specifics of small and large brands

If the vendor's products are sold by about 10-00 stores, the above algorithm is quite suitable. With its daily attention, the manufacturer disciplines sellers and they reduce the number of violations of the RRP, and regular calls and personal letters only increase their influence on retailers.

But if we are talking about a popular brand that is on the virtual shelves of a dozen or even hundreds of online stores, in this case it faces a serious problem: - the market volume is too large and difficult to control. And if the manufacturer cannot cope with this task, he will lose control over retail, which will then be extremely difficult to restore. Today, in the context of global competition in the e-commerce market, price is largely a determining factor. Therefore, managers of manufacturing companies are willing to consider the possibility of automating price monitoring, which, on the one hand, helps relieve employees and, on the other, reduces the number of violations by sellers.

To solve this problem, the vendor can take one of three possible paths: regularly purchase ready-made pricing reports from consulting companies̆, create your own software or use a ready-made solution from companies for which price monitoring is a key competency. In terms of benefits, cooperation with consulting companies is the least effective way.

Yes, the vendor receives information about retail prices, but often with a delay, and in the role of a passive observer, since he does not have the ability to quickly influence the market. The advantage of the second option, self-development, is that the company creates a service tailored to its business processes, plus there is no need to pay money to a third party. Of course, this will result in a voluminous project that requires the involvement of full-time specialists, both at the creation stage and in subsequent technical support.

Another disadvantage is time. After all, while the company rolls up its sleeves and works on creating software, and this is about 6-12 months, the main task is not solved, and price monitoring continues in manual mode, without automation. But the current eCommerce market is very dynamic, and whether the time spent on development will justify itself is a big question. What if the vendor attracts a company with a ready-made solution? At a minimum, this option is suitable for those who, having realized the shortcomings of manual monitoring, want to quickly automate it. On average, integration with the service will take 2-3 days.

This format will suit companies that do not have at their disposal required amount IT specialists, and there are a majority of such companies in the CIS. In this case, the use ready-made solution may not fully correspond to the specifics of a particular manufacturer, but you can try to solve this problem by choosing a service representative whose service best meets your expectations.

“Automation of RRC monitoring and identification of violators has an advantage over manual monitoring. To get an objective picture of the retail price level, the manufacturer will need only 10 minutes of working with the system, and one specialist is enough to ensure the process.

According to statistics, this approach optimizes labor costs for monitoring by an average of 80%. In addition, vendors gain effective leverage over sellers, since the system independently identifies violators, documents the violation and sends warnings - all this happens in automatic mode, followed by providing management with daily reports. And thirdly, the company receives market data with high accuracy - about 98% - and can be confident in the objectivity of the information.

All this greatly simplifies working with large amounts of data. We studied the impact of the transition from manual monitoring to an automated solution on 50 clients and noted significant progress in their monitoring and control of the RRP,” says Alexander Galkin, co-founder of the Competera price monitoring service.

In any case, regardless of how vendors monitor retail, the fight against dumping creates a synergy effect for all market participants, because the bearish game is unprofitable for any of the parties: - for vendors, this is an undesirable impetus for the devaluation of the brand, and the Internet --stores lose margins and sales income. Therefore, the absence of dumping is a victory for both sides.

Instead of a conclusion

With the development of the eCommerce market in the next few years, the amount of data in the segment will grow rapidly, as will the need for more careful and sensitive work with it. In such conditions, a business that does not strive for automation will eventually hit a ceiling on its own productivity.

That is why developed companies are increasingly automating their business processes, increasing competitive advantage, in contrast to those who did not realize in time the enormous importance of such evolutionary processes.

The main reason for dumping is the desire of one country (or company) to increase its share in the foreign market through competition and thereby create a monopolistic situation where the exporter can clearly dictate the price and quality of the product. In modern trading it is considered a kind of dirty trick.

Definition

In simple terms, what is dumping? The essence of this definition is very simple and unambiguous. Dumping is the act of charging a lower price for a similar product in a foreign market than its normal market value. In accordance with the anti-dumping agreement of the World trade organization(WTO) dumping is not prohibited if it does not threaten to cause material damage to the industry of the importing country. Dumping is prohibited when it causes “material delay” in the establishment of an industry in the domestic market.

Local dumping

Local dumping is a reduction in the price of a product in the domestic market. The term has a negative connotation because it is perceived as In addition, worker rights advocates believe that protecting businesses from practices such as dumping helps mitigate some of its more severe impacts on different stages economic development. For example, the European right often refers to EU trade policies as “social dumping” because they have promoted competition among workers, as exemplified by the stereotype of the “Polish plumber” as a collective image of people from of Eastern Europe, who agree to work in wealthier countries at reduced prices, squeezing local laborers out of the market. Of all types of dumping, it is considered the safest.

Rockefeller example

There are several examples of local dumping that created a monopoly in regional markets for certain industries. Ron Chernow gives the example of regional oil monopolies in his book Titan: The Life of John D. Rockefeller, Sr. He mentions a strategy whereby oil in one market, such as Cincinnati, would be sold at a price below the prevailing price to reduce a competitor's profits and knock it out of the market. In another area where other independent businesses have already been driven out, Chicago, prices will increase by a quarter. Thus, an oil company that has resorted to such a dumping policy will benefit and get rid of competitors. After this, it becomes clear why they are trying to fight such dirty tricks in all modern states.

Fight against dumping

If a company exports a product at a price that is lower than the price it would normally charge in its own domestic market, or at a price that does not represent the full cost of production, it is considered to be “dumping” the product, which is dumping. It is considered one of the forms price discrimination third degree. Opinions vary as to whether the practice constitutes unfair competition, but many governments take action against dumping to protect domestic industries. However, the WTO does not make a clear decision on this issue. The WTO's main focus is on how governments can or cannot respond to dumping - it can be said to "discipline" anti-dumping actions. Since dumping is an artificial reduction in prices, the WTO allows importing countries to force exporters to raise prices to accepted standards.

The WTO Agreement allows governments to act against dumping when there is genuine (“material”) injury to a competing domestic industry. To do this, the government must prove that dumping is occurring, calculate the extent of dumping (how much lower the export price compares to the exporter's market price), and show that the dumping causes harm or threatens economic stability.

Anti-dumping agreements

Although dumping is permitted by the WTO, the General Agreement on Tariffs and Trade (GATT) (Article VI) allows countries to take action against it. The Anti-Dumping Agreement clarifies and expands Article VI, allowing countries to act together.

There are many different ways calculating how much the price of a product drops. The agreement narrows the circle possible options. It provides three methods for calculating the "normal value" of a product. The main one is based on the price in the exporter's domestic market. When this cannot be determined, two alternatives are available: the price charged by the exporter in the other country, or a calculation based on the aggregate of the exporter's production costs, other expenses, and normal profit. The agreement also specifies how a fair comparison can be made between the export price and the regular price.

Five percent rule

According to Footnote 2 of the Anti-Dumping Agreement, domestic sales of a like product are sufficient to provide normal value if they account for 5 percent or more of the sales of the product in question in the market of the importing countries. This is often referred to as the five percent rule or the domestic viability test. This test is applied worldwide by comparing the quantity of a similar product sold in the domestic market with the quantity sold in the foreign market.

The normal value cannot be based on the exporter's domestic market price when there are no domestic sales. For example, if products are sold only in the foreign market, normal value must be determined on a different basis. In addition, some products may be sold in both markets, but the quantity sold in the domestic market may be small compared to the quantity sold in the foreign market. This situation often occurs in countries with small domestic markets such as Hong Kong and Singapore, although similar situations can also arise in larger markets. This is due to differences in factors such as consumer taste and Maintenance.

Economic damage

Calculating the degree of dumping is not enough. Anti-dumping measures can only be applied if acts of dumping harm an industry in the importing country. Therefore, a detailed investigation must first be carried out in accordance with the specified rules. The study must evaluate all relevant factors that influence the state of the industry in question. If dumping is found to be occurring and affecting the domestic industry, the exporting company may increase its price to the agreed level to avoid anti-dumping import duties.

Investigations

Detailed Procedures set out in relation to how anti-dumping cases should be initiated, how investigations should be conducted, and the conditions to ensure that all interested parties have the opportunity to present evidence. must cease five years after the date of enactment unless an analysis shows that their termination would harm the economy.

The essence of the procedure

An anti-dumping investigation usually develops as follows: domestic manufacturer makes a request to the appropriate authority to initiate an anti-dumping investigation. An investigation is then conducted for the foreign manufacturer to determine whether this claim is valid. It uses questionnaires completed by interested parties to compare the export price of a foreign producer (or producers) with a normal cost (the price in the exporter's home market, the price charged by the exporter in another country, or a calculation based on a combination of the exporter's production costs, other expenses, and normal profit). . If the export price of a foreign manufacturer is lower than the regular price, and the investigating authority proves causation Between the alleged dumping and the damage caused to the domestic industry, he comes to the conclusion that the foreign manufacturer is lowering the price of its products. It is necessary that the actions of the exporter in each such case fit the concept of dumping.

Under Article VI of GATT, dumping investigations must be completed within one year, except in special circumstances.

Investigation failure

Anti-dumping investigations are immediately terminated in cases where the authorities determine that the margin of dumping is minimal or negligible (less than 2% of the export price of the product). Among other things, other rules are established. For example, the investigation should also end if the volume of imports dumped is negligible.

The agreement states that member countries must promptly and thoroughly inform the Anti-Dumping Practices Committee of all preliminary and final anti-dumping actions. They must also report all investigations twice a year. When differences arise, members are encouraged to consult each other. They may also use the dispute settlement procedure provided for under WTO rules.

Example of European agricultural policy

The European Union's Common Agricultural Policy has often been accused of dumping, despite significant reforms, under the Agreement on Agriculture in the Uruguay Round of GATT negotiations in 1992 and subsequent agreements, notably the Luxembourg Agreement in 2003. The CAP sought to increase European agricultural production and support European farmers through a process of market intervention, whereby a special fund, the European Agricultural Guidance and Guarantee Fund, would buy up agricultural surpluses if the price fell below that secured by central intervention.

European farmers were given a "guaranteed" price for their produce when it was sold in the European Community, and the export offset system ensured that European exports were sold at below world prices, in no way inferior to the European producer. This policy fits the definition of dumping and has therefore been heavily criticized as distorting free market ideals. Since 1992, EU policy has moved somewhat away from market intervention and direct payments to farmers. In addition, payments are typically conditional on farmers meeting certain conservation requirements. environment or animals, to encourage responsible and sustainable Agriculture through so-called multifunctional agricultural subsidies. The social, environmental and other benefits of subsidies will no longer include simply increased production. Dumping is not prohibited in Russia, unlike the EAEU, of which the Russian Federation is a member.